How do the best quarterbacks always seem to overcome pressure to make that one small adjustment late in a game to deliver a winning touchdown for their team? The answer, whether applied to the game of football or business, signals the difference between being good or great.
As Jim Collins pointedly wrote in his trailblazing book Good to Great: Why Some Companies Make the Leap and Others Don’t, “The vast majority of companies never become great, precisely because the vast majority become quite good — and that is the main problem.” The little things matter.
Like an experienced quarterback reading the defense to adjust the play, supply management professionals have the ability to assess their environment and make micro adjustments to thousands of related variables that ultimately determine if a new program launch is profitable.
The accelerated pace of innovation and global change over the past five years has made strategic sourcing ever more dynamic. Sudden market supply shortages of raw materials require quicker adjustments to priorities, suppliers and parts.
Fostering Change Habits
Ongoing change is inevitable; how organizations plan for and manage change enables manufacturers from aerospace to automotive industries to foster greater supply chain agility and profitability. “I always tell my team you can email good news. You have to call to share bad news,” says Tony Pinho, president of Duggan Manufacturing LLC, a Shelby Township, Michigan-based metal stamping and welded assembly Tier-1 supplier.
Communication nuances matter for industries like automotive. Context can often further assist OEM customers with making related adjustments to avoid a net vehicle program time-line delay. Now, more so than ever, hours and minutes matter.
Accepting change. While focused on solving a complex set of supply challenges with multiple dependencies, it is easy to get lost in the work. When overwhelmed, it is important to remember that change is a part of life. As a counterpoint, it is also important to be kind to ourselves and exude empathy towards others with how they internalize change. Today, many supply management professionals face more change than they ever have before.
“Change can be scary; we are all built initially to resist change.” says Alan Shevela, global director of supply chain at Southfield, Michigan-based Aludyne, Inc., an aluminum and iron cast and machined components Tier-1 supplier. It is critical for leaders to facilitate and emphasize the mindset and provide the tools needed to best navigate change. “I strive to lead by example and emphasize to my team that change is a good thing,” Shevela says. “It means we're learning something new because we don't know the answer yet.”
Systemizing change habits. Elite quarterbacks at the college and professional level can step up to the line of scrimmage, read the defense, adjust the play and manage the offense. This “audible” is a simple yet effective change management approach to optimize the team’s outcome based on the environment.
Similarity, supply management leaders are increasingly utilizing agile project and task management software tools to make game adjustments on critical new program launch tasks. Real-time task status reading allows managers to align the right team skills more quickly with potential supply issues as events unfold.
Unfortunately, labor shortages across the industrial value chain continue to cause experience knowledge gaps that are difficult to make up overnight when many are learning on the fly. Increased visibility across multiple programs can benefit emerging professionals and allow for more efficient mentoring opportunities for time-strapped managers.
Further, the opportunity to work virtually has shifted from a short-term situation to a long-term expectation of top supply management talent. Astute job candidates now are asking hiring managers, “What percentage of work can be conducted virtually? And how will work be delivered?”
Assigning agile tasks with hours-based points can help to better navigate larger project workloads by quantifying more approachable micro tasks. Rolling up a team’s tasks across a complex program launch, such as for an automotive front-end suspension module, offers a more dynamic view of sourcing time lines and bottlenecks.
Among the bottlenecks: port congestion. “The ocean-freight traffic jam of as many as 100 ships at the Ports of Los Angeles and Long Beach is causing ocean freight lead times to be delayed 30-40 days on average,” says Brandon Gratz, director of global supply chain at Taylor, Michigan-based international logistics services provider ICAT Logistics, Inc.
In a supply chain game of minutes, each second counts. Tracking real-time part commercial changes to lead times can strengthen a company’s program launch data foundation, which can improve team reaction time when change inevitably occurs.
Managing Product-Launch Change
The impact of change is often magnified for complex assembly launches. For example, automotive front-end suspensions can encompass more than 110 parts, from control arms to coil springs, that a Tier-1 supplier purchases.
The cost of control-arm raw material, aluminum, has increased 63 percent over the past year, according to Chicago, Illinois-based research platform YCharts. This massive, short-term shift has left supply management leaders scrambling to mitigate, but not eliminate, passing on raw material cost increases to OEM customers.
The combination of the quantity and frequency of changes has many organizations seeking to automate repetitive tasks. An example: continuously inputting standard aluminum control-arm part costs into an early new suspension module program bill of materials.
More organizations are using software application programming interfaces (API) to pull standard part-costing data into a collaborative automated-plan-for-every-part software system, resulting in a number of benefits, including the reduction of human error and freeing up time for more value-added tasks. During times of rapid and prolonged change, automated tasks can also input the latest raw material prices to maintain more accurate module costs based on models that include part weights and other variables.
Leaning Into Macro Changes
Change isn’t exclusive to the supply management profession. In the automotive industry, change has taken on broader meaning as complete business models are shifting. Increased global awareness of the need for more sustainable transportation of people and goods has led to an explosion in new vehicle startups. Forward thinking Tier-1 suppliers like Aludyne Inc. are leaning into new market entrants with an eye towards impactful growth.
“How do we maintain and grow our customer base, but also expand into new markets?” says Shevela, whose company traditionally supplies such global automotive OEMs as General Motors, Toyota and Stellantis. “This is a seismic change for us.”
New startup automotive OEMs like Rivian and Lucid are operating different business models, causing suppliers to adjust their traditional approaches to launching parts and modules. Often, startups are not only creating a disruptive new vehicle but establishing the processes in parallel. The aftereffect for traditional suppliers is an increase in workload for a larger number of lower-volume vehicle programs. Subtle differences in how teams manage changes can often make the difference in a project’s growth.
As with a critical play in the fourth quarter of a close football game, maintaining momentum is a key to winning. One small adjustment can have a cascading positive effect on several related items on a new program launch.
How organizations prepare, systematize and manage change will determine if they win or lose the supply chain game.